Excess Profits Research Articles

ЮРИДИЧЕСКАЯ ХРОНИКА

The October Chronicle presents comments on the introduction of new types of taxes: excess profit tax and one-time taxes; the adoption of the Constitutional Court ruling on the correlation between a court decision to terminate a criminal case of private prosecution and the decision of internal affairs bodies to refuse initiating a criminal case; the introduction of additional administrative responsibility of social network owners and the adoption of the law on the regulation of economically significant organisations.

CRITICAL REVIEW OF CHAPTER II - TRENDS IN INTERNATIONAL MARKETS: TRADE AND DEVELOPMENT REPORT 2022, (P41-67)

This critical review concentrates on Chapter II of The Trade and Development Report (TDR), which is prepared annually by the United Nations Conference on Trade and Development (UNCTAD) and presented to the General Assembly via the Secretary-General of the United Nations. TDR 2022 provides analysis of global trade trends and policy issues that affect trade and financial flows, and offers recommendations how to make the world economy fairer for all nations. Published in April 2023, the Report relays a warning of economic stagnation which will especially adversely affect developing nations. It cites supply-side disruptions and the war in Ukraine as major factors behind inflation, food and energy price increases and cost-of-living crises. It singles out monetary tightening in advanced economies and appreciating US dollar as main contributing factors in capital retreat from developing nations and increases in cost of their dollar denominated debt. TDR 2022 estimates that after having spent $379 billion of national reserves for the purpose of currency protection in 2022 alone, many developing nations are now left with dwindling central bank reserves. This begs the question, does the supremacy of some economies in relation to the global economy and their outsized influence on the global economy, warrant an attempt at new and improved central bank mission statements that should be looked at by various governments? Perhaps that effort could concentrate at articulating statements that take into account central bank actions that are intended to stabilize, protect, and expand the global economy as a whole, thus evolve today’s selfish approach by competing central banks that are single-mindedly focused on domestic circumstances. By concentrating locally, their actions are often seen as simply displacing economic pains rather than attempting to fix them. Therefore, the Report offers some recommendations how to avert negative spillovers from monetary tightening policies in advanced economies and austerity measures that accompany them. Other recommendations pertain to leveling the global economic playing field and include reforming the international legal framework governing debt, windfall taxes on excessive profits, and reigning in speculative activities in commodity markets.

The economics of profit-cap policy: Big Pharma, Big Tech, and the duopoly rule

A known policy dilemma occurs between the need to curb extra-large profits by some industries, like pharmaceuticals, and the need to ensure the incentive to produce is not damaged. This paper shows that a profit cap, imposed via taxation on a group of firms, can simultaneously eliminate inefficiency and excess profit by intensifying competition among oligopolistic firms. The result has a direct bearing on policy debates on COVID-19 vaccine sharing and the use of vaccine donation as a “humanitarian obligation,” and, more generally, on the regulatory institutions needed for industries that rely on R&D.

신원보증보험계약상 사용자 구상권의 범위

The employer who compensated for damages suffered by a third party due to an employee's illegal activities in an insurance policy of fidelity guarantee can use the right to indemnity against the employee for the remaining damages without being transferred to the insurance money received from the insurance company. However, the criteria for setting the scope of the specific amount of money are different from the original trial and the Supreme Court. The Supreme Court presupposes that the plaintiff's damages are the total damages paid to the third party due to the defendant's fault in determining the amount of indemnity for the policyholder of the insured. However, the Supreme Court overlooked that liability insurance is a contract that guarantees legal damages on the insured. In addition, in order to calculate the specific insurance premium in the event of an insurance accident, the liability limit of the fidelity guarantor must be determined after confirming the scope of legal liability for damages of the policyholder. This judgment of the Supreme Court does not correspond to the legal principle of liability for employer's liability under the civil law. In view of the fact that the plaintiff, who is the insured, enjoys unfair excess profits, it also violates the principle of actual expense compensation in the non-life insurance system. Therefore, the judgement of the court of first instance is right which judged the plaintiff's indemnity amount deducting the insurance money already paid from the legal damages.

Autumn in New York: The Case of Long-Term Care Facilities in the "Safe Staffing" Lawsuit With Less Staffing But Similar COVID-19 Outcomes.

In 2022, 239 New York state long-term care facilities (LTCFs) challenged a "Safe Staffing" law in court. Our study compares LTCFs involved and not involved in the lawsuit, testing for differences in staffing measures and resident outcomes during the first year of the coronavirus disease 2019 (COVID-19) pandemic. New York LTCF-level data were obtained from the Centers for Medicare and Medicaid Services 2019 organization and 2020 COVID-19 data files. These data were then linked to data from the Long-Term Care Community Coalition, which identified the LTCFs involved in the "Safe Staffing" lawsuit. We first tested for differences in reported 2019 staffing levels by lawsuit involvement. Second, we specified "Doubly Robust" regression models to test if lawsuit involvement was associated with differences in resident COVID-19 infections, COVID-19 deaths, and overall mortality. LTCFs involved in the lawsuit reported lower staff ratings and fewer staffing hours compared to LTCFs not involved in the lawsuit. Despite finding higher rates of admissions with COVID-19 in LTCFs involved in the lawsuit, we did not find that COVID-19 infections, COVID-19 deaths, or overall mortality differed by lawsuit involvement. LTCFs involved in the lawsuit were deemed by policymakers as reducing staff, earning excess profits, and placing residents at risk. While these LTCFs reported lower staffing levels, we observed no differences in resident outcomes during the first year of the COVID-19 pandemic. Researchers and policymakers should develop more nuanced perspectives concerning the relationship among LTCF staffing, outcomes, and organizational profitability.

ANALYSIS OF TRENDS IN THE DEVELOPMENT OF THE PHARMACEUTICAL MARKET OF UKRAINE IN 2007–2021

The purpose of the paper is to analyse the development trends in the retail market for pharmaceuticals in the national aspect for the period 2007-2021 and to identify changes in the trends caused by the COVID-19 pandemic. Methodology. The article analyses the main indicators of the development of the pharmaceutical market of Ukraine: sales volumes in the pharmacy network in value and physical terms for the period 2007-2021. Periods of growth at different speeds were identified (2007-2012; 2013-2015 and 2016-2019) using methods of regression analysis are used, namely: development of trend models with an assessment of their quality based on the calculation of the coefficient of determination R. Results. The paper conducts a trend analysis of the total monetary revenue in the pharmaceutical retail market of Ukraine; conducts an analysis of the volume of sales in kind and the dynamics of the average price per package; makes a forecast of the dynamics in the pharmaceutical retail market of Ukraine for 2020 and 2021. It also identifies changes in trends caused by the COVID-19 pandemic and offers measures for further development of the pharmaceutical market of Ukraine. Dynamics models were created for each period and a forecast for 2020-2021 was made on the basis of the model for the last period. The impact of the beginning of the COVID-19 pandemic was analysed, a decrease in sales volume in April 2020 was estimated (by 45.9% compared to the forecast), it was found that within 6 months the dynamics of the market recovered, which indicates the high adaptive properties of the system. Practical implications. A comparison of sales volume dynamics in Ukraine and the world for 15 years from 2007 to 2021 showed that sales volume in Ukraine is growing five times faster than in the world as a whole. This proves that in the pharmaceutical industry both manufacturers and pharmacy chains have been making excessive profits at the expense of consumers. Value/originality. Such a situation in the pharmaceutical industry requires the development of measures at the state level to curb the growth of prices and increase transparency in their formation.

Trading rule discovery using technical analysis and a template matching technique for pattern recognition: Evidence from the Chinese stock market

AbstractThis paper examines the potential profit of bull flag trading rules in the Shangai Stock Exchange Composite Index (SSE) using a template matching technique based on price pattern recognition. This paper fills a gap in the literature by applying a template matching technique for the recognition of bull flag patterns in the Shangai Stock Exchange Composite Index (SSE) during the period of 1991–2021. To the best of our knowledge, no previous study has applied bull flag trading rules to the Chinese stock market. Our results indicate that bull flag trading rules can correctly predict the price movement direction of the index most of the time, achieving significantly positive excess profits. Moreover, shorter fitting windows and better quality of price fit values for lower holding periods are associated with better performance. This research may have relevant practical implications for investors who opt for this indicator in their asset allocation decisions.

Corporate Financial Problems: A Case Study of Listed Manufacturing Companies in Nigeria

A number of manufacturing firms in Nigeria are folding up. Although, there are several reasons why this is happening, the study investigated the corporate financial problems: A case study of listed manufacturing firms in Nigeria because of the crucial roles they play in the Nigerian economy. The results of the previous studies reviewed showed that equity financing had a positive significant impact on the financial performance of listed manufacturing firms in Nigeria. However, the findings on debt financing were not consistent. While some studies reported that debt financing had a positive significant impact on the financial performance of listed manufacturing firms in Nigeria, some revealed that debt financing had a negative significant impact on the financial performance of listed manufacturing firms in Nigeria. Thus, the study recommends that the listed manufacturing firms in Nigeria should continue to use the optimal level of equity in financing their operations because by using equity, they have directly avoided the payment of high interest that may impact negatively on their performance. In using equity to finance their activities, the excess profits can either be paid as dividend or they can be reinvested into the business for better performance if the management considers it that it is better do so.

The predictive ability of technical trading rules: an empirical analysis of developed and emerging equity markets

We investigate the predictability of leading equity indices of 23 developed and 18 emerging markets with a set of 6406 technical trading rules over up to 66 years. Using a state-of-the-art test for superior predictive ability to control for data snooping bias, we find in-sample evidence for technical heuristics with significant outperformance over a simple buy-and-hold strategy in the majority of markets. The proportion of heuristics with superior performance is much higher among emerging market indices, and the predictability diminishes drastically over time in all markets. In particular, markets turn unpredictable in the last years of our sample. Moreover, the results are very sensitive to the introduction of moderate transaction costs. An out-of-sample analysis shows that the performance of technical rules is not persistent in the sense that recently best-performing rules perform significantly worse than simple buy-and-hold strategies in the future. Overall, our results cast serious doubt on whether investors could have earned any excess profits using the broad range of considered technical trading rules.

Improvement of the mechanism of collecting windfall taxes and fees in the era of international sanctions and the growth of public spending (2023–2024)

The subject of the study is modernization of budget relations based on horizontal decentralized connections. The relevance of the study is mitigation of the shortcomings and risks in 2023, especially the tax on excess profits of previous years. The goal of the study is to develop a fundamentally different scheme for financing a part of government spending on the principles of “uberization” that is mutually beneficial for the state and business. The objective of the study is to improve the mechanism of the one-time fee on large business (windfall tax). The research method is the analysis of business community opinions, foreign experience, results of research work of the Department of Public Finance and the Department of Taxation and Tax Administration of the Financial University. The basic principles of building a new decentralized electronic platform are described. Specific examples of federal budget expenditures that should be “uberized” in the first place are considered: federal subsidies for NPOs and financing of the “Krug Dobra” fund. The scientific novelty and practical significance of the proposed new mechanism for additional financing of public expenditures is direct connection of payers and recipients of budget subsidies on an electronic platform while preserving the control functions of the State. The conclusion is made about the practical applicability of the proposed new scheme of “uberization” of budgetary relations as a mechanism for collecting the one-time fee on large businesses (windfall tax), which can actually unload the federal budget, “liberating” it from part of expenses, without creating additional sanctions and other risks for participants.

The Implications of Pillar Two for Corporate Tax Reform

Recent proposals for corporate tax reform in Canada call for changing the existing tax on shareholder income to a tax on rents or above-normal profits. A feasible option would be an allowance for corporate equity (ACE) system based on the territorial principle. Canada has agreed to the approach to international corporate tax reform developed by the Organisation for Economic Co-operation and Development, including the pillar two minimum tax proposal. We explore the compatibility of adopting pillar two with the ACE system. Several elements of pillar two would complement moving to an ACE system. Large multinational corporations would be liable for a top-up tax if their effective tax rates in any given jurisdiction fell below 15 percent. The effective tax rates and the top-up tax would both use the territorial approach and consolidated accounting. The top-up tax would be similar to a tax on excess profits. Pillar two might also mitigate tax competition and reduce the constraints that countries face in increasing their tax rates on excess profits. For these reasons, pillar two would facilitate moving to an ACE system. At the same time, the minimum tax would deter adoption of an ACE if the deduction for the cost of equity finance reduced the pillar two effective tax rate. On balance, pillar two would be compatible with proposed corporate tax reforms.

Do Digital Technology Firms Earn Excess Profits? Alternative Perspectives

ABSTRACT Despite regulators’ allegations that digital technology giants misuse their market power to earn abnormal profits, there is a dearth of systematic work on (1) whether digital-tech firms in general, and tech giants in particular, earn excess profits or (2) whether their abnormal profitability, if any, is due to market power. We use two alternative measures of economic profitability in addition to accounting rate of return (ARR): internal rate of return (IRR), which equates current investments to their long-term payback, and return on invested capital (ROIC), whose numerator (profits) and denominator (invested capital) are adjusted for capitalized intangibles. Inferences based on IRRs differ from those based on ARRs and ROICs. IRRs show that the digital-tech sector is now the best-performing sector, and its gap between profitability and cost of capital has increased over time. We are unable to separate the contribution of market power and innovation to digital tech’s high IRRs. JEL Classifications: D43; L1; M21; M41.

International Collaboration in Times of Pandemics: An Urgent Need for Reforming our Global Financial System

Better, swifter and more responsive international coordination is needed within our global financial system for the containment of the pandemic and its effects. This requires better international tax coordination with a higher global minimum corporate tax, comprehensive coverage of sectors and firms, inclusion of all current tax havens and more generous redistribution of excess profits to developing nations based on user location. There also needs to be a more substantial and easier-to-access mechanism for debt relief and restructuring, one that generously suspends debt payments in periods of crises and provides financial support without strict and painful conditionalities.

The EU Solidarity Contribution and a More Proportional Alternative: A Study Under EU and International Investment Law

This paper reviews the EU Solidarity Contribution that was recently introduced by the Council Regulation on Emergency Intervention to Address High Energy Prices and proposes a more proportional alternative. It is argued that the legitimacy of the EU Solidarity Contribution might be disputed. The role that Member States have played in driving up energy prices by filling their natural gas storages much more than the EU’s filling trajectory prescribes raises questions as to whether the EU Solidarity Contribution could be in conflict with the proportionality principle and whether all formal requirements of Article 122(1) Treaty on the Functioning of the European Union (TFEU) have been fulfilled. Furthermore, it is argued that the EU Solidarity Contribution may compromise protection of investments under international investment agreements (IIAs) as the current design might entail elements that violate fair and equitable treatment (FET). As an alternative to the EU Solidarity Contribution, the article proposes the following. First, a legal commitment should be introduced for fossil fuel companies to invest 100% of their realized excess profit for decarbonizing the economy under the threat of taxing away those excess profits in their entirety should it become apparent that the investments are not actually realized. Second, in lieu of the EU Solidarity Contribution, the incidental financial support measures for vulnerable households could be financed with the excess (windfall) revenue collected from Value Added Tax (VAT) and excise due to the high inflation in the EU in 2022. EU tax policy, EU law, international investment law, EU solidarity contribution, proportionality, emergency intervention, energy prices, fair and equitable treatment

Формування системи державного управління реалізацією продукції рослинництва: організаційно-фінансові аспекти

Introduction. State regulation should embrace not only the sphere of production, but also the sphere of circulation of horticulture production. The amount of state budget revenues and the solution of numerous social and economic problems depend on the successful implementation of measures of state management of horticulture production exports, control of financial flows generated in this area. Problem Statement. Scientific substantiation of the formation of a single state body of management of horticulture production circulation. Purpose. To substantiate proposals for strengthening the state financial regulation of the processes of horticulture production circulation. Methods. The following methods were used: abstract and logical, systematization, dialectical and formal logic, expert evaluation. Results. The system of horticulture production circulation in Ukraine is researched. A number of negative phenomena related to the inefficiency of state mechanisms for regulating the sale of horticulture production have been identified, in particular, purchase prices and sales prices for horticulture production are dramatically lower than the world average; the spread of shadow circulation of horticulture production is observed, including the participation of its exporters, which indicates the receiving of excess profits by participants of export operations. At the same time, Ukraine is a significant participant in the global market of horticulture production, and due to increasing government impact on the organization and control over the sale of horticulture production, especially in foreign markets, the significant replenishment of the country's budget could be expected. Conclusions. The state management at the sphere of horticulture production circulation involves taking into account many factors operating in foreign and domestic markets and having a negative impact on the opportune and full receipt of funds from the sale of products to the state budget. The shadowing of agricultural production and sales, the lack of effective pricing mechanisms, and insufficient control over foreign economic operations undermine the basis of sustainable activity of the agricultural sector and the country's economy as a whole. We consider that the problems with the regulation of the circulation of horticulture products can be solved by an authorized state body with special functions and powers, which can be created on the basis of the State Reserve Agency of Ukraine. It is advisable to provide it with the powers of the sole exporter of horticulture production; the sole State purchaser of horticulture production; the sole controller of the circulation of horticulture production and its processed products.

Fiat State Aid Case Putting the EU Arm’s Length Principle to Bed?

This article discusses the Fiat case next to the (potential) interplay and consequences thereof for the pending (informally called) Apple and Belgian Excess Profits cases.

Portfolio Analysis Based on the U.S. Stock Market

As investors place more and more importance on stocks as a financial instrument, how to construct a portfolio of securities in order to avoid risks and obtain more excess profits has become an important issue in the financial world. This paper analyzes the assets of ten representative companies in different industries in the U.S. stock market. The paper uses the closing price data of these ten companies for the past 20 years to construct the optimal portfolio by means of mean-variance model and index model. The results show that in the mean-variance and index models, PG has the highest weight in the minimum variance portfolio, while AAPL in the maximum Sharpe ratio portfolio tends to have the largest weight and can be considered for inclusion in the portfolio at the time of investment. The results of this research may be useful to potential investors interested in the relevant areas of the U.S. stock market.

The Impact of the Global Minimum Tax on Tax Competition

This article examines the impact of the Pillar Two Global Anti-Base Erosion (GloBE) Rules on tax competition. It sets out and explores three main conclusions on the GloBE Rules’ impact on tax competition. First, the GloBE Rules set a floor on tax paid on profit by multinationals equal to 15% of “Excess Profit”. They also set a floor on competition among “source” countries. Second, the GloBE Rules may provide some countries with an incentive to raise revenues through a qualified domestic minimum top up tax rather than a corporation tax. Third, countries can compete below the floor by offering grants and “Qualified Refundable Tax Credits”. The article proposes an alternative design for the top-up tax calculation that may have been preferable. Overall, it concludes that the impact of the GloBE Rules on tax competition may be less straightforward and significant than may have been expected. The rules also create incentives that are not clearly desirable from a policy perspective.

Return of state financial losses corruption criminal acts

In the reform era, in 1999 to be precise, Law Number 31 of 1999 concerning the Eradication of Corruption Crimes was formed, which was later amended and added to in 2001 by forming Law Number 20 of 2001 concerning Amendments to Law Number 31 of the Year 1999 (hereinafter referred to as the Corruption Act). The aim of the Corruption Crime Law is to prevent the loss of state money due to unlawful acts by unlawful state officials, or other parties who benefit. The urgency of returning state finances due to criminal acts of corruption, is caused more by losses as a result of the unlawful acts of the perpetrators. Returning state financial losses does not eliminate corruption. By returning state losses, it has actually been stated that there were state losses that occurred before. In voltooid delict, state losses have existed or occurred if the state losses were desired by the perpetrators of criminal acts. The intention to harm state finances can be seen from the will of perpetrators criminal acts who wish to gain more profit from activities financed with state funds. This excess profit creates a shortage of work carried out resulting in state losses, namely that the amount of money spent is not in accordance with what is spent or there is a shortage of state money spent.

Analysis of factors affecting the excess profitability of mutual funds in Russia for 2015-2022

The relevance of the study of financial market instruments is undeniable and well aligned with the achievement of Russia's national development goals until 2030. The subject of this article is the excess return of Russian mutual funds (MF) in the period from 2015 to 2022. The authors analyzed in detail the scientific literature and took as a basis the conclusions and results obtained in previous studies on similar topics. The aim of the study was to find the factors determining the excess return of mutual funds, which is the difference between the return of the funds and the return of the selected benchmark. The study was based on data from Investfunds Internet portal, which provides information on investment assets for a wide range of people. Econometric analysis was conducted based on an unbalanced panel consisting of an average of 185 funds per year. To achieve the objective, we studied already existing econometric models for analyzing excess fund returns and used them to construct a pass-through regression model and a fixed-effects model. Analyzing the performance of mutual funds depending on their parameters will allow investors to get relevant recommendations about which fund should be preferred to buy a share in its portfolio, which corresponds to the scientific novelty of the study. The main conclusion of the study is that using econometric criteria, the fixed-effects model was selected as the best of the constructed models. A notable contribution of the authors to the study of the topic is the identification of the main aspects that investors should pay attention to when choosing a mutual fund, namely funds with a high net asset value, the object of investment of which are stocks and money, and the direction of investment - precious metals.